Put more focus on essential areas for M’sia to recover from health crisis

By creating new market demand and accelerating innovation capability in the private sector, Malaysia could move towards a first-mover economy, low-carbon economy and inclusive society soon.

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Published in Focus Malaysia & Business Today, image by Focus Malaysia.

THE commitment to advocate the green, digital and social protection agenda presents Malaysia an opportune moment towards the road to recovery from the COVID -19 pandemic.

This can be seen when the current administration launched the 100 Million Tree Planting Campaign on Jan 9, followed by the Malaysian Economic and Rakyat Protection Assistance Package (Permai) worth RM15 bil on Jan 18, as well as the Malaysia Digital Economy Blueprint and the MyDIGITAL Initiative on Feb 19.

With the introduction of four economic stimulus packages amounting to RM305 bil and Budget 2021 amounting to RM322.5 bil over the past one year, Malaysia’s economy contracted only at 1.7% in Dec 2020, compared with 28.7% in April 2020. The unemployment rate has also declined from 5.3% in May 2020 to 4.9% in Jan 2021.

Despite having a second phase of the movement control order (MCO 2.0) in mid-Jan 2021, the Government could strike the right balance between lives and livelihoods.

As more economic sectors were allowed to operate during the MCO 2.0, there is a reduction of the country’s losses to RM300 mil a day compared to RM2.4 bil a day during the MCO 1.0.

In addition, the Government took a relatively targeted approach in combating the COVID-19 pandemic during the MCO 2.0. Despite Pahang only recording a one-digit infection (8) on March 1, the Government announced on the same day the imposition of the enhanced MCO (EMCO) at Felda Jengka 1, 2 and 7 as well as Felda Ulu Jempol in Maran, Pahang from March 2 to 8.

As the Government is aware of the ongoing struggles of the rakyat, Prime Minister Tan Sri Muhyiddin Yassin promised to introduce additional stimulus measures the soonest possible when delivering his One Year of Concerned (Prihatin) Malaysia keynote address on March 1, namely:

  1. Provide targeted assistance to vulnerable groups, especially the poor and those who have lost their income;
  2. Enhance support for businesses, especially businesses that are still unable to operate and those in the process of reopening post-MCO;
  3. Focus on the public delivery system, especially in ensuring that aids could reach those in need, expedite the implementation of development projects and reduce bureaucracy so that the economic activities at all levels will remain vibrant, thus encouraging new investments from within and outside the country; and
  4. Focus on the digitalisation agenda in line with the growth of new resources and the transformation of the country’s economy in knowledge-based and innovation-based activities.

Although digitalisation would promote growth opportunities in the digital, green and circular economy, Malaysia Digital Economy Blueprint (MDEB) did not indicate how to stimulate long-term economic growth and new employment opportunities over the next ten years.

According to the MDEB, there are three phases in the roadmap implementation to achieve long-term aspirations, which are as follows:

  • Phase 1 (2021-2022): Accelerate adoption towards strengthening the digital foundation;
  • Phase 2 (2023-2025): Drive digital transformation and inclusion; and
  • Phase 3 (2026-2030): Become a regional market producer for digital products and digital solutions provider.

To address the ongoing structural issues of the country, the Malaysian Government perhaps should learn from the South Korean Government – focusing on green, digital and social protection agenda, for Malaysia to achieve a knowledge-intensive and productivity-driven growth in the next few years.

Since July 2020, the South Korean Government launched the Korean New Deal, a national development strategy to support recovery from the pandemic crisis and lead the global action against structural changes.

There are three policies under the Korean New Deal:

  1. Digital New Deal: Promote digital innovation and dynamics in the economy;
  2. Green New Deal: Accelerate transition towards low-carbon and eco-friendly economy; and
  3. Stronger Safety Net: Strengthen the basis for a people-centred and inclusive country.

Moreover, there is a relatively clear investment timeline presented under the Korean New Deal, which is as follows:

  • Phase 1 (2020): Investment will be made in projects that help overcome the crisis or that can be implemented immediately. 6.3 trillion won including 4.8 trillion won from the treasury will be invested through the 3rd Supplementary Budget 2020.
  • Phase 2 (2021- 2022): Investment will be increased to achieve the new growth path. 67.7 trillion won including 49 trillion won from the treasury will be invested and 887,000 jobs will be created.
  • Phase 3 (2023-2025): Final touches will be added to solidify the new growth path. 160 trillion won including 114.1 trillion won from the treasury will be invested and 1,901,000 jobs will be created.

Even though the National Employment Council (MPN) is a great initiative to create 500,000 jobs for Malaysians by the end of this year, it does not provide specification with the number of new jobs in the respective economic sectors such as digital, renewable and manufacturing sectors.

When the Malaysian Government could modify the South Korean Government approach in advocating the green, digital and social protection agenda, in accordance to local context, Malaysia would be able to:

  1. Minimise economic shock by creating jobs. It creates not only government-supported jobs for low-skilled workers but also jobs that support the structural transition towards a digital and green economy;
  2. Resume the country’s economy back to normal by building the necessary infrastructure for a digital and green economy that will restore investment and support job creation; and
  3. Set the groundwork to adapt to the structural changes and lead the global community in the post-COVID-19 era.

By creating new market demand and accelerating innovation capability in the private sector, Malaysia could move towards a first-mover economy, low-carbon economy and inclusive society in the upcoming years.

Amanda Yeo is Research Analyst at EMIR Research, an independent think tank focused on strategic policy recommendations based on rigorous research.

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